Personalized Pricing

Posted by Richard on January 7, 2021

How your data determines the price that companies think you might pay.
In a highly connected world, with people routinely digitizing much of their lives, we have become accustomed to the idea of our information as a product. But do consumers know the extent to which their data is commercialized? And should we be comfortable with practices like product pricing based on our browser history or ZIP code?
According to Digital Trends, every time you visit a website, someone collects your personal data — your location, your browser history, your device — and often, this data is then sold to third parties, such as advertisers, marketers and other data firms. The end goal: To sell more stuff at the highest price possible.

Higher prices for some?
Fluid rate changes — also known as dynamic pricing — is a data-driven practice that lets companies charge consumers more based on the data that they collect. According to ProPublica, in 2015, test prep company The Princeton Review was caught charging higher prices for online users in ZIP codes with larger Asian-American communities. According to the Washington Post, the airline industry often uses data to personalize airfares for potential passengers, setting fares based on information they collect and market conditions. And online retail titan Amazon uses dynamic pricing to nudge prices up as they increase in popularity, according to Money Talks News.
Lots of questions persist about data collection practices. According to the Harvard Business Review, many of these algorithms are trade secrets — even the companies that buy data do not necessarily know how or what data is being collected.
At least one legislature has acted on privacy concerns. In California, the California Consumer Privacy Act (CCPA) went into effect at the beginning of 2020 and requires businesses under their jurisdiction to allow users to opt out of the sale of their data.